BUDGETARY CONTROL PROCEDURES FOR INTERSECTION

by Margaret Austin

This document covers the placing of orders, the processing of all personal expenses claims and the payment of all invoices (including advance payments) except those handled by TR for which special arrangements apply.

(Fiona: TR was our US Vice Chair, who had to observe US laws as well as our own)

Definitions:

Personal expense: Any expense incurred by an individual member of staff on behalf of Intersection for which reimbursement direct to the individual is sought.

Invoice: A bill from a supplier of goods or services to Intersection for which payment to the supplier is sought.

Order: A contractual commitment made on behalf of Intersection with a supplier for goods or services required by Intersection.

To commit: To place an order or otherwise enter into a legally binding obligation to make a payment or to supply goods or services in kind.

GENERAL

1. Overall responsibility for managing the Intersection Budget will be vested in the Budgetary Controller (for the time being this is Vince). Division Heads will be notified by the Budgetary Controller of the amount of that part of the Budget for which they are responsible. Division Heads will by this process become Budget Holders and, as such, will be required to monitor both expenditure and commitment within their own divisions and must ensure that their respective budgets are not exceeded without the prior approval of the Budgetary Controller.

2. Budget Holders will be permitted, at their own discretion, to vire funds from one heading to another within their own budgets up to a limit of 10% of the value of the heading to which funds are transferred. Virement in excess of this limit is subject to the prior approval of the Budgetary Controller. (eg suppose that heading A, stationery, has a budget of GBP2000 and heading B, membership badges, has a budget of GBP3000 then funds of up to GBP200 (ie 10% of GBP2000) can be transferred from A to B at the Division Head's discretion.)

3. Intersection funds may not be used for private purchases. Division Heads will be required to account to the Board for all expenditure incurred by their respective divisions and shall be responsible for ensuring that Intersection funds are not misused.

4. The Budgetary Controller will be the first point of contact for any queries concerning budgetary matters. Where there is a requirement in this document for the prior approval of the Budgetary Controller to be obtained requests should be addressed to the Budgetary Controller (ie Vince as at llth November 1994) and copied to Martin, Oliver and Margaret. In the absence of Vince, approval (or otherwise) will usually be given by Martin. In the absence of both Vince and Martin, either Margaret or Oliver will reply on behalf of the Budgetary Controller .

5. Budget Holders will be required to update their forecasts of total expenditure for their respective divisions and to submit reports of estimated total expenditure on a monthly basis to the Budgetary Controller. Budget Holders will be required to notify the Budgetary Controller immediately any problem comes to light which might result in their budget being exceeded. Reports should be copied to Martin, Margaret and Oliver for information.

COMITTMENT OF INTERSECTION FUNDS

1. Only budget holders (ie Division Heads and above), or those to whom budget holders have specifically and explicitly sub-delegated (in writing) part or all of their respective powers of commitment, are authorised to commit Intersection funds. For commitments exceeding GBP500 in value the prior approval of the Budgetary Controller must be obtained before the order is placed. Commitments may only be made in respect of items which appear in the budget holder's budget and for which sufficient funds are available having regard to actual expenditure and existing commitments to date. Once an order has been placed Intersection is legally bound to make payment in accordance with the terms of the contract so a commitment should be thought of as equivalent to funds already expended when forecasts of total expenditure are produced and/or budgets are revised.

2. No budget holder may commit an amount exceeding their own budget, nor may they commit funds against someone else's budget.

3. Budget-holders may, at their own discretion and risk, delegate authority to make purchases up to GBP500 in value to any member of their staff subject to the procedures described herein. Delegations in excess of GBP500 may only be made with the prior approval of the Budgetary Controller. Where such delegations are made, it will still be necessary for the prior approval of the Budgetary Controller to be obtained before an individual purchase exceeding GBP500 is made.

4. Copies of letters of delegation and sample signatures of all who are authorised to commit funds (ie place orders) or authorise invoices for payment must be filed with the Co-Chairs, Oliver and Alice for information.

5. Copies of all orders exceeding GBP500 in value together with an indication as to when payment is expected to be required should be filed with Alice for information.

6. For the purposes of determining whether the prior approval of the Budgetary Controller is required before a commitment is entered into, the GBP500 limit applies to the aggregate value of all purchases to be made at or around the same time. Division Heads will be responsible for ensuring that orders are not split into smaller lots in order to get around this limit.

7. Advice concerning the interpretation and/or implications of terms and conditions of contract may be obtained from either Margaret Austin or Mike Westhead. If in doubt, please call us before entering into any commitment.

PAYMENT OF INVOICES

1. Where payment of an invoice is required (eg for hire of the SECC, printing costs for a PR, purchase of a fax machine by the Office), the invoice should first be authorised for payment by the relevant budget holder (ie the Division Head). Before authorising an invoice for payment, budget holders must satisfy themselves that the goods or services have been supplied in accordance with Intersection's requirements as stated in the contract with the supplier and that the amount claimed is appropriate. Where the Budget Holder is satisfied that the amount claimed is appropriate notwithstanding that it exceeds the value of the contract an explanation for the increase should be provided to Alice when the invoice is submitted for payment. Failure to do this will result in payment being delayed.

3. Where the budget holder is also the person who made the actual commitment to which the invoice relates (ie the person who placed the order) then the countersignature of the relevant area head (for invoices up to and including GBP500 in value) or a Co-Chair or Deputy Co-Chair (for invoices of any value) must be obtained before the invoice can be passed for payment.

4. Except where the terms of the contract stipulate payment in advance (eg for the hire of the SECC), invoices should not normally be paid before the service has been satisfactorily completed or the goods have been delivered. The advice of either Margaret Austin or Mike Westhead should be sought at the first hint of a supplier failing to satisfactorily complete a contract (eg under deliveries, inadequate service, wrong price charged, timescales not met).

5. Where payment with order is required and the value of the order exceeds GBP500 the prior approval of the Budgetary Controller should be obtained as described above. The letter or e-mail of approval should be submitted with the invoice to Alice. The invoice should be authorised for payment in accordance with the procedure described above.

6. Authorised invoices should be sent to Alice who will check that the appropriate signatures of authorisation for payment have been obtained, that the invoice has not already been paid and that the sum payable does not exceed the amount stated in the contract. If all is in order, Alice will raise a cheque and arrange for its signature and despatch to the supplier following the same principles described below under PERSONAL EXPENSES . Alice will inform of the Budgetary Controller of any irregularities. (As a matter of course, Division Heads should inform both Alice and the Budgetary Controller well in advance of the anticipated need to make payment of a large invoice to enable those concerned to make alternative arrangements for cheque signing in the event that a signatory is unavailable for any reason.

7. Whenever practicable, the words 'authorised for payment by...' and the signature of the relevant Budget Holder should actually be written on the invoice itself. However, e-mail authorisations will be accepted routinely from the Co-Chairs and their Deputies and, in emergencies only, from Division Heads provided that they are sent direct to Alice and not through a third person and subject to the sender's e-mail address being recognised by Alice on receipt. (The invoice should be sent to Alice in any case.)

8. Division Heads are responsible for ensuring that invoices are approved for payment in a timely manner to enable payment to be made within the period specified in the contract (30 days unless otherwise stated).

9. The Budgetary Controller is responsible for making sure we have enough money in the Intersection current account to meet anticipated payments!

PERSONAL EXPENSES

1. Personal expenses should be claimed on the form produced by Oliver (blank copies are available from either Alice or the Office).

2. Claims must be approved by the Division Head whose budget the expense is to be charged to or a Co-Chair or Deputy Co-Chair. Subject to the conditions which follow, Division Heads may at their own discretion approve expenses claims for items:

(a) which appear in their budget and

(b) for which sufficient funds are available in their budget having regard to actual expenditure and commitments to date.

Conditions

(i) Only actual, reasonable expenses necessarily incurred in the pursuit of Intersection's business are eligible for reimbursement.

(ii) No one is allowed to approve their own claims or those of their partner. Vince and Martin may approve each other's claims. Deputy Co-Chairs may not approve the claims of the person they deputise for but may approve the claims of the other Co-Chair subject to the above. For Directors, Co-Chairs and Deputy Co-Chairs this means that claims can be approved as follows:

Vince's claims by Martin or Oliver
Martin's claims by Vince
Oliver's claims by Vince, Martin or Margaret
Margaret's claims by Vince or Oliver

3. Deputy Division Heads may not approve expenses claims.

4. Claims exceeding GBP200 in value must be countersigned by a Co-Chair or Deputy other than the claimant's partner. (Oliver can countersign Martin's claims once they have been approved by Vince. Margaret cannot.) Division Heads will be responsible for monitoring the cumulative totals of claims made by their staff. Where several claims, the collective value of which exceeds the limit stated above, are submitted by an individual over a short period of time these should be treated as a single claim and referred to a Co-Chair or Deputy Co-Chair for countersignature.

5. Approved claims should be sent to Alice who will check that the approval signatures are in accordance with the above. If they are, she will raise a cheque and sign it herself except in the case of her own expenses, those of Steve or any member of Finance Division in which case she may still raise the cheque but not sign it. Where Alice is empowered to sign the cheque and where the sum payable does not exceed GBP150 she will sign the cheque and despatch it to the claimant. Where either the sum payable exceeds GBP150 or Alice is not empowered to sign it she will send the cheque with a photocopy of the claim and supporting documentation (eg receipts or an invoice), together with a stamped envelope addressed to the claimant, to one of the following people for countersignature:

Oliver
Martin
Margaret
Vince

6.The Budgetary Controller will be the default countersignatory but the choice will depend on both who is available and the name of the person to whom the cheque is payable. No one may sign a cheque:

(a) drawn in favour of themselves or their partner; (b) which represents payment of their own or their partner's claim or a claim which they have approved; or (c) which is to be countersigned by their partner.

7. Once countersigned the cheque should be despatched to the claimant in the envelope supplied and Alice should be informed (e-mail will suffice) of the date of despatch. (In. the case of cheques drawn in favour of Alice, Steve or any member of Finance Division, Alice should indicate to which person the cheque should be sent for the second signature, where required, before despatch to the claimant.)

8. Where the claim is either for an unbudgeted item or cannot be met from remaining funds prior approval from Vince must be obtained before the claim is approved.

9. A person who requires an advance to meet anticipated expenses may be allowed an imprest subject to the imprest claim being approved by their Division Head in accordance with the above procedures and subject to a claim being submitted in the normal way to account for the actual expenditure after the event. Such a claim must clearly state the amount of the advance so that an appropriate adjustment can be made to the sum paid. Division Heads are responsible for monitoring the payment of imprests and for ensuring that they are properly accounted for. Where the advance is required in order to make a major purchase a quotation or invoice should accompany the claim. It will be the usual practice in this situation for the cheque to be drawn in favour of the supplier and not the claimant. (Please remember to obtain a tax invoice or tax receipt for VAT purposes.)


VAT AND INTERSECTION

by Margaret Austin

I said I would do a ten minute dissertation on VAT at the staff weekend but, in the event, there wasn't a suitable opportunity so here it is in writing instead. I strongly urge all staff to read it. Please do not hesitate to contact me if you have any queries.

1. Worldcon (Scotland) Ltd - Intersection's official company name - is registered for VAT. Our VAT registration number is (XXXX)

2. In common with other VAT registered companies, Intersection is required to charge VAT on its sales. (This includes, but is not limited to: memberships; dealers tables; commission on art show sales; hanging fees for the art show; tables in the fan market and Intersection's own merchandise.) As a matter of policy we will be quoting all prices as VAT inclusive figures from now on so as to avoid confusion. VAT which we collect on sales is called 'output' VAT and must be handed over to H M Customs and Excise. We do this through the quarterly VAT return which Alice handles. It is therefore essential that you all inform Alice as soon as possible, and in any case no later than the end of the week following our quarter end dates (see para 6 below), of the details of any income which you taken on behalf of Intersection during the relevant quarter.

3. Only VAT registered bodies charge VAT. Only those dealers who are registered for VAT will be charging VAT at Intersection. (This is likely to exclude US dealers unless they trade regularly in the UK and expect their annual income from sales to exceed the current threshold above which traders must register.) An unregistered person who purported to charge VAT would be guilty of a criminal offence. A company registered for VAT must provide a VAT receipt when asked to do so by a customer.

4, A VAT receipt must show the company's VAT registration number, the rate of VAT applied, the actual amount of VAT charged as well as the name of the company and the tax point (for sales of memberships this will be the date of issue of the VAT receipt).

5. When Intersection buys goods and services from other VAT registered bodies it will be charged VAT. This VAT is called 'input' VAT (as it is VAT payable on goods and services coming IN to the company). Provided that we comply with the rules and regulations laid down by HM C+E, most notably that we obtain a VAT receipt or VAT invoice for the goods and/or services purchased, Intersection can recover this VAT either by offsetting the amount paid against the output VAT on our quarterly VAT return or, where the input VAT exceeds the output VAT, by claiming a refund from HM C+E. Those who buy goods and services on behalf of Intersection should ensure that the supplier is informed that we are a limited company and should ask for the invoice to be addressed to Worldcon (Scotland) Ltd c/o whichever staff address is relevant.

6. HM C+E requires all VAT registered bodies to submit returns of income and expenditure on a quarterly basis. These returns, together with any payment due, must be submitted by the end of the month following the end date of the quarter. Intersection's quarter end dates are: 31 January, 30 April, 31 July and 31 October which means the returns are due on 28 February, 31 May, 31 August and 30 November.

7. We are required to show on each VAT return the VAT exclusive amounts of our income and expenditure, together with input and output VAT for the relevant quarter.

8. Generally, the point of sale (ie the date on which the income appears in our cash book) is the earlier of the following:

(i) the date of issue of the VAT receipt;

(ii) the date on which the money is actually received.

This means that for UK and US sales the point of sale is the date of issue of the receipt and not the date on which cheques are paid into the bank or the date on which details of the transactions are sent to Alice. Our European agents, who do not issue VAT receipts, are regarded as collecting membership applications on Intersection's behalf. These memberships are processed when they reach the UK. The point of sale is when the monies are received in the UK. Technically, persons who join in this way do not actually become members until their names are entered into the UK membership database.

When Caroline takes a credit card booking for a dealers table the point of sale is the earlier of when the VAT receipt is issued or the credit card transaction is processed. The accounting is more straightforward if these two events occur simultaneously. Until the credit card transaction is processed the table can be regarded as reserved but not actually sold.

9. When Intersection sells artwork in the art show it does so acting as agent for the actual seller ie the artist (or owner of the artwork). VAT will not be charged on the sale price. The commission which is deducted by Intersection from the sale proceeds will be deemed to be inclusive of. VAT. This is because effectively a separate transaction takes place between Intersection and the seller ie Intersection provides a service to the seller, the charge for which is the amount of the commission. For example, suppose a piece of artwork is sold for GBP 100. Intersection deducts GBP 12 as commission and hands GBP 88 to the seller. The commission comprises GBP 10.21 plus GBP 1.79 VAT so Intersection surrenders GBP 1.79 to HM C+E. The seller is given a VAT receipt showing these figures.

10. Because of the delay between payment by Intersection for goods and services which we purchase and the submission of the VAT return we need to know the amount of the input VAT for cash flow purposes and budgetary control notwithstanding that we expect to recover the input VAT eventually eg we might be required to make a payment of GBP 10,000 plus 1,750 VAT on 10 August 1995 in respect of the hire of some equipment for the convention. We would not be able to reclaim the GBP 1,750 until we submitted the relevant quarter's VAT return towards the end of November and would not actually receive the cheque from HM C+E until the end of December (Christmas post permitting). In monitoring our cash flow, Vince therefore needs to ensure that we have GBP 11,750 and not just 10,000 in our bank account on 10 August. This is why Vince has asked Division Heads in updating their budgets to provide him with both the VAT exclusive amounts and the amounts of any recoverable VAT for each of their line items notwithstanding that at the end of the day the true cost to the company is the VAT exclusive figure. Similarly, he needs to know the VAT exclusive amount of any income as it is only the VAT exclusive amount which is usable..

11. For accounting purposes, that portion of each membership sold which covers the cost of publications supplied to members is deemed to be zero-rated for VAT. The balance of the fee is deemed to include VAT at the standard rate (currently 17.5%).


FINANCE AND BUDGETS

By Fiona Anderson

I was concerned at the way in which the original Budget lines for the Ops Budget were set up, and it seems to me that someone had just used some previous Worldcon budget to set all the figures, rather than looking at our particular situation. At least that was the only explanation I could think of as to why the figures were so completely inappropriate to our needs…

Now I don't know which (if any) Worldcon's budget was taken as a model for ours, but whichever it was, that was the wrong approach for Ops at least. It may be that the needs of some areas are identical, from year to year, or from country to country, I don't know. But the plain fact was that not only were we using a different Ops model from the US Ops model, but it was equally different from the Conspiracy model (the previous UK Worldcon), or the ConFiction model (the previous European Worldcon).

This meant that when I looked at the budget I was given originally (GBP 5000 I think), and looked at what I actually needed, there was a huge difference. Not a slight difference, not a percentage difference, but a bloody huge unbelievable difference. After costing up my various areas I reckoned I really needed GBP 17500 *at least*. Having rechecked with my Area Heads what they thought they needed to run their Areas, and putting together my own estimates for Areas without Area Heads, there was no way we were going to manage on GBP 5000, so I put the case to the Board, and they agreed the new Ops Division Budget.

Now, I've no idea how this affected other Divisional Budgets at the time, but it must have done - the money had to come from somewhere after all. And it seems to me, from what Claire says in her Promotions report, that this was not an isolated example, but a result of the budget being borrowed wholesale from elsewhere with no real thought about how our circumstances must inevitably be different from any of the possible templates available.

My conclusion is simple: before a con-wide budget is set, each and every area should go through a process of devising a list of its needs and an estimated cost for each one, and then the DH should put these all together to form the basis of the draft Divisional Budget. After that, the Board, as a whole, should look at the total budget, and Finance should advise them on the basis of their financial expertise. But since Finance doesn't have operational expertise, the Board should be approaching the con-wide budget as an exercise needing input both from Finance and from the Divisions together.

I can quite understand people who on reading this go into a paroxysm of horror - most fans do not like dealing with budgets and bureaucracy, and the sums involved in a Worldcon can be huge - but failing to get it right at the start means you are doomed to go through all the hoops we had to jump through to get it right by the con, with the resultant harassment all along the way of trying to fit your needs to someone else's design.

I'm not saying you shouldn't look at other Worldcon's budgets - indeed you should do so - but you should use them as a starting point, as a source of ideas, and as a checklist to see what you might have forgotten, not as the Bible of your financial planning.

The various questions I think that each Division needs to look at are:

I am sure that more experienced Finance people can think of things I have completely overlooked, but I think that each Division Head needs to *take* responsibility for their budget, not just to *accept* the responsibility for a budget they haven't actively helped design for their Division's needs.